Rudd: The election is over, now what?

Yes, I was as shocked and surprised as anyone by the recent election results. However, if you look past the election hyperbole, it becomes evident that a large portion of our country’s population feels abandoned and hurt by both the Great Recession and the then subsequent economic revival.

The country’s white middle class that is on the downside of middle age has watched their incomes shrink as job opportunities dissipate. Donald Trump was merely a catalyst that caused the discontent to finally erupt in a manner that cannot now be ignored. We should be thankful that the explosive path taken held onto a degree of belief in our democratic system.

Regardless of which side of the economic or political fence you are on, there is one thing about which we can all agree; that a historic election is over; the country has spoken and now it is time for the winning team to see if they can put some points up on the economic scoreboard.

Donald Trump won the presidency on a theme of lower taxes, increased infrastructure and defense spending, less regulation and higher trade barriers. I wish him luck. Personally, I am not sure why anyone of sound mind would want the job. They say a new broom sweeps clean, but it is going to take a lot more than a new broom to get our economy fully functional, while at the same time keeping a degree of restraint on Wall Street’s activities.

Nonetheless, there is a new sheriff in town and the ground rules for corporate America and Wall Street are going to change radically. To calm the firm’s investors, Sharmin Mossavar-Rahmani, Goldman Sachs chief investment officer, advised private wealth clients to "stay the course" on expectations for an upcoming large stimulus bill to be initiated by Trump.

Until now neither Wall Street nor Congress were taking each other seriously and neither took the mood of the country. In the space of an evening, all that changed. Trump won avid and unrelenting support among middle-aged, white, non-college educated workers as he campaigned on a pledge to take the country on a more isolationist, protectionist "America First," path.

While change brings opportunity, do not become so overly enamored with trying to capitalize on future incipient trends that you lose sight of your key investment objective, which is to find proven companies that have a high probability of producing capital gains and dividend growth over the next several years.

Specific companies to watch include those that have large cash balances “trapped” offshore and are likely to benefit from being able to return a portion of this cash to shareholders in the form of share repurchases and to some degree as increased dividends.

The concern over near-term action on drug pricing will likely take a back seat in the new administration. With Republicans controlling the White House, Senate and House, threats to the pharmaceutical industry’s drug pricing policies are unlikely.

In that vein, Trump is also less likely to fight for Medicare to have negotiating powers on drug prices, particularly as a Republican House and Senate are unlikely to be supportive.

Investors should be forgiven if they feel discouraged. It is difficult to put forth the emotional fortitude required to deal with excessive market volatility, as was evident during the 24 hours following the election. To be able to do so is a rare and commendable trait.

Remember the market's dramatic decline after Britain voted in June to leave the European Union. The decline was short-lived and ultimately became a buying opportunity. Meanwhile, there will continue to be a degree of near-term uncertainty as the world awaits January's inauguration for more concrete details of what a Trump presidency means to the investment world.

Please keep in mind what President Obama said when he was elected, “We are the global leader in technology and discovery and innovation, with all the good jobs and new businesses that follow...furthermore, progress will come in fits and starts. It's not always a straight line. It's not always a smooth path.” To which Wall Street says, Amen.

Lauren Rudd is a financial writer and columnist. You can write to him at LVERudd@aol.com. Phone calls accepted between 10 a.m. and 3 p.m. EST at (941) 706-3449. For back columns please go to www.RuddInternational.com.